Steven L. Lombardo v. Mercantile Resource Group, Inc.
- Beth Freeman
- 5:20-cv-02153
- U.S. District Court · Northern District of California
- 4
In Steven L. Lombardo v. Merchantile Resource Group, Judge Freeman ordered plaintiffs to explain jurisdiction and service problems and extended the service deadline.
Steven L. Lombardo and Life Force Trust had to explain federal jurisdiction and submit proper service documentation. Merchantile Resource Group, Inc. and Choctaw Management Group were defendants who had not appeared, and the court questioned whether they had been properly served.
What happened
In Steven L. Lombardo and Life Force Trust v. Merchantile Resource Group, Inc. and Choctaw Indian Asset Recovery Trust, the court questioned whether it had authority to hear the case and whether defendants were properly served.
The plaintiffs brought contract and fiduciary-duty claims. The court said the complaint did not clearly identify every defendant’s citizenship or show that more than $75,000 was at stake. It also questioned service based on documents showing that the summons and complaint were emailed to Clifford Wilkins in the United Kingdom and that he said he forwarded them to defendants.
The court ordered the plaintiffs to respond by July 2, 2020, explaining the basis for federal jurisdiction and whether service put defendants on notice. It extended the service deadline by 30 days, allowing a new proof of service by July 18, 2020. Judge Freeman warned that the court would recommend dismissal for lack of jurisdiction if the response was unsatisfactory, and would recommend dismissal without prejudice if no new proof of service was filed.
The detailed version
- Steven L. Lombardo v. Mercantile Resource Group, Inc. · No. 5:20-cv-02153
- Beth Freeman
- June 19, 2020
Background
Steven L. Lombardo and Life Force Trust sued Merchantile Resource Group, Inc. and Choctaw Management Group on claims for breach of contract and breach of fiduciary duty. The plaintiffs asserted diversity jurisdiction, which allows a federal court to hear certain disputes between citizens of different states when more than $75,000 is at stake.
The opinion states that Life Force Trust is an estate-planning trust whose trustee is Lombardo, and that Choctaw Management Group is an estate-planning trust whose trustee is David Sanchez. Lombardo is a California citizen. The plaintiffs and Sanchez formed Merchantile Resource Group, described as a West Indies corporation with its principal place of business in Georgia, to share ownership and responsibilities for 82 securities bonds.
Jurisdiction concerns
The court issued an order to show cause, meaning it required the plaintiffs to explain why the case should proceed. The court found that the complaint did not identify the citizenship of every defendant. In particular, because a trust’s citizenship depends on the citizenship of its trustee or trustees, the court said Choctaw Management Group’s citizenship could not be determined without information about Sanchez’s citizenship.
The court also questioned the amount in controversy. The contract attached to the complaint valued the bonds at a historic collectible value of $200 to $300 each, while the complaint valued them at $1,000 each. The court said the complaint provided no apparent basis for the higher valuation and that the alleged amount in controversy appeared conclusory.
Service-of-process concerns
The court analyzed service under California law. It was not convinced that the plaintiffs had made the required reasonable efforts before using substitute service. The record showed one service attempt on April 1, 2020. The proof of service was unclear about whether service was personal, electronic, or otherwise made, and identified Clifford Wilkins as the person who received the summons for defendants.
Wilkins later stated that he forwarded the summons and complaints to defendants’ last known address. The court noted, however, that the filings did not identify that address. The court summarized the service record as consisting of emailing the documents to Wilkins in the United Kingdom and Wilkins saying that he forwarded them to defendants’ last known address. The court found that the plaintiffs had not met the service requirements under California law.
Order
The court ordered the plaintiffs to file a written response by July 2, 2020, addressing both subject matter jurisdiction and whether defendants were properly served and put on notice. The court extended the time for service by 30 days and allowed the plaintiffs to submit a new proof of service by July 18, 2020. If no new proof of service was filed, the court stated that it would recommend dismissal without prejudice under Federal Rule of Civil Procedure 4(m). If no satisfactory response to the jurisdiction concerns was filed, the court stated that it would recommend dismissal for lack of jurisdiction. The opinion did not itself dismiss the case or decide the underlying contract and fiduciary-duty claims. Judge Beth Freeman is identified in the supplied case metadata; the reproduced signature is not legible and identifies the signer only as a United States Magistrate Judge.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.